Nautilus posts $1.38 million 3Q profit

Vancouver-based maker of fitness equipment sees retail sales resurgence

By Aaron Corvin, Columbian Port & Economy Reporter



Nautilus Inc., the Vancouver-based manufacturer of fitness equipment, posted a third-quarter profit of $1.38 million Monday, reflecting a resurgence of its brick-and-mortar retail sales. That compares with a profit of $951,000 in the July-to-September period in 2012.

During their quarterly earnings conference call, company executives said Nautilus continues to build an improved business foundation by introducing new cardio and strength products, boosting its relationship with retail store partners and carrying no debt.

While overall consumer confidence and planned spending levels “continue to be concerning,” said CEO Bruce Cazenave, the “underlying trends” of all the company’s business segments show “we’re working on the right things” and “tracking well” to build long-term profitability and sustainable growth.

Bill McMahon, chief operating officer for Nautilus, addressed the company’s direct-to-consumer segment, through which it sells cardio and muscle-building machines by way of TV, social media and other advertising.

That segment saw sales of $25.72 million in the third quarter, a year-over-year increase of 2.5 percent. McMahon said sales in that section of Nautilus’ business have “been running below targets” because of soft consumer sentiment in the summer and fall. However, he said, the company anticipates a more robust showing in its direct-to-consumer division in the fourth quarter — seasonally, the company’s strongest sales period.

Nautilus reported overall net sales of $46.3 million in the third quarter, a 22 percent increase from $38.1 million in the same three-month period a year ago. That strong growth was primarily because of the performance of the company’s brick-and-mortar retail segment.

Indeed, sales in that division of the company’s business shot up 70 percent to $19.36 million in the third quarter. McMahon said those numbers benefit by being compared to “an unusually low (third) quarter” in 2012, which involved a decision by retailers to accelerate their purchases in the second quarter to avoid an expected price increase by Nautilus.

Nevertheless, McMahon said, the brick-and-mortar retail segment’s substantial third-quarter results represent “real growth despite these timing factors.” He added that Nautilus’ new porfolio of retail products, including elliptical and recumbent exercise machines sold at multiple price points, are “more in line with what our retail partners are looking for.”

Company executives also said Nautilus’ balance sheet remains strong.

As of Sept. 30, the company had cash and cash equivalents of $27.7 million and no debt. That compares with cash and cash equivalents of $23.2 million and no debt at the end of 2012. Meanwhile, Nautilus’ working capital — a measure of both a company’s efficiency and its short-term financial health — was $35.2 million as of Sept. 30. That compares with working capital of $25.4 million at the end of 2012.

Cazenave said Nautilus has made “tremendous improvements” over the past several years, including launching new products and refreshing its approach to marketing, which has given the company “access to consumers we previously couldn’t reach.”

The company’s stock, which trades as NLS, closed up 16 cents Monday, at $7.96 per share. The company’s shares have traded between $2.80 and $9.87 in the past 52 weeks.

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